Students who amassed more than $744 million in debt while attending a now defunct college accused of predatory practices may be able to have their loans forgiven courtesy of Uncle Sam.

While this is bad news for taxpayers stuck with the bill, it’s allowed under a law governing federal aid at schools guilty of misconduct, and it’s necessary relief for affected students. But don’t get any ideas – everyone else still needs to make their student loan payments.

In making the announcement this week, Secretary of Education Arne Duncan said the schools run by Corinthian Colleges “brought the ethics of payday lending into higher education.”

The chain of schools, founded a decade ago, have been under investigation by state attorneys general and the Consumer Finance Protection Bureau, in part because of aggressive recruitment tactics that seemed to target single parents below the poverty line and to encourage people with dubious academic potential to enroll and take on debt.

Last year, a librarian at one Corinthian school quit when she found that a student she was helping could read only at a third-grade level. Investigators also determined that at least one Corinthian school, Heald College, gave false information about the percentage of students who got jobs after graduation. Absolving all Corinthian students of their debt would be an almost imperceptible reduction in the $1.2 trillion in student loans dogging the nation, and it should not give encouragement to graduates of reputable schools to stop paying their loans.

But if the fraud was as egregious as investigators claim, this is a case that demands universal relief.


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